Originally from Dispute Resolution Journal

Using the recent Circuit City decision as a departure point, Paul Nicolai discusses the importance of an effective employment ADR program and the need for employers to adopt an ADR policy that reflects the changing needs of the workplace. He notes the advantages of employment arbitration, but also examines the issues surrounding the process. He cites numerous court decisions to show that now, more than ever, employers need to take control of their exposure to litigation stemming from employment disputes. His warning: “The war over whether employee handbooks are contracts is over. Employers need to rethink their employment policy strategies to live with this fact.” The following is the conclusion of this two-part series.

Voluntary and Informed Consent

In Prudential Insurance Co. v. Lai,45 the Court found that where employees were given insufficient time to review the arbitration agreement, they did not knowingly waive their right to go to court. This decision has generally not been followed elsewhere.46 The Lai decision is, like the Rosenberg decision, based on the idea that arbitration of Title VII claims is to be encouraged if the parties knowingly and voluntarily elected arbitration.

In Hoffman v. Aaron Kamhi Inc., the Court held that an agreement to arbitrate is not knowingly and voluntarily made when the clause describing what claims are to be arbitrated is unclear.47

The application of the Older Workers Benefit Protection Act’s definition of a knowing and voluntary waiver has been rejected as applied to arbitration agreements.48